Curve Steeper At The Margins, 30-Year Supply Eyed

E-minis have ticked higher during Asia-Pac hours. The moves are limited in terms of the broader picture, but are managing to keep some light bear steepening of U.S. Tsys in play in the wake of the passage of the U.S. COVID relief Bill, with some thawing of Sino-U.S. tensions potentially becoming evident (although the U.S. has maintained hardline rhetoric surrounding Hong Kong). T-Notes sticking to a very narrow 0-03 range thus far, last -0-00+ at 132-16+, with 30s providing the weak point on the cash curve, trading ~1.5bp cheaper on the day at typing. No impact on the broader Tsy space as Verizon kicked off a jumbo 7-tranche round of issuance. Elsewhere, Tsy Sec. Yellen noted that the U.S. "could reach full employment by as soon as next year. Our Treasury team will be doing everything we can to accelerate the recovery."

• As a reminder, Wednesday saw the curve steepen and the belly outperform, with 30s finishing ~0.5bp cheaper while the 5- to 7-Year sector richened by 1.5bp. The space recovered from intraday cheaps on the back of the softer than expected U.S. core CPI prints (with subsequent readings set to be skewed by COVID related base effects). The richening ultimately resulted in a 1.0bp tail at Wednesday's heavily watched round of 10-Year Tsy supply, with the cover ratio holding steady around recent averages and dealer participation ticking up to above recent average levels. Still, the market took the auction in its stride given the aforementioned richening and decent enough internals (remember that last month's soft 7-Year supply resulted in increased scrutiny of this particular offering). Wednesday also saw the House pass the amended COVID-19 relief Bill, President Biden is expected to sign the Bill on Friday. NY flow saw a TY/WN block steepener and UXY block buyer.
• Focus moves to Thursday's ECB decision, 30-Year U.S. Tsy supply and weekly jobless claims data.